Monthly Archives: July 2010

Should we strike a balance between giving customers what they want and giving them what they’ll come to value?

Giving customers what they want the way they want it often does them no favors. In particular, providing customers immediate gratification often comes at a cost to actual value delivered.  Customer empowerment complicates this issue. Not that I would ever say a bad word about customers (or clients), but they can be incredibly short-sighted at their own expense. Nonetheless, they’re really feeling their oats, and many take an “our way or the highway” stance.

Should we strike a balance between placating/satisfying and delivery maximum value―or go all one way or the other?

Why Can’t Business Streamline Front & Back Office Operations?

The latest McKinsey Quarterly reports new data that should upset those designing organizations and managing operations in O/S (office/service) settings. While manufacturing managed to reduce its expense-to-sales ratio by 2.7% over the past year, despite 90& 0f cost-cutting initiatives failing to last beyond 3 years, the SG&A (sales, general % administration – which is basically front and back offices) remained flat.  And these outcomes defy reason, because office “bloat” is virtually endemic to business and is rarely addressed, while most manufacturing operations had already been streamlined to some degree by year 2000, the starting line for data aggregating.

A quick and spurious retort might be, “Hey, we’re just taking better care of customers.” Wrong. When redesigning office organizations and process Outside-In (starting with customer needs), we routinely find clients can – and should – reduce overall office FTE count by 20%, and often more. All these extra people are standing in the way of delivering what customers want most, second only to quality products backed by quality service – dealing with well-trained, empowered employees. Also, the more hands touching work without adding value the greater the number of “fumbles.”

But those are just the facts (and the McKinsey data is corroborated by heaps of empirical evidence). Whose responsibility is it to streamline O/S workplaces? And considering at least some efforts are underway, why aren’t they improving the overall numbers, which empirical evidence also supports?

What’s the “Secret Sauce” that Lets Only Some Companies Go Outside-In & Put Customers First?

Lior Arussy from the Customer Experience side of business just relayed an interesting observation in a Customer Experience Group (Linkedin) post―that executives frequently claim only new organizations can go customer-centric because you can’t change the DNA of more mature companies. He was asking for contrary examples, and I fed him a bunch (Best Buy, UPS, USAA, most upscale hospitality chains). And I actually forgot among the toughest environments for migrating to customer-centricity―retail car dealers―where multiple regional networks have now successfully crossed the threshold from inside-out to Outside-In.

 But Lior’s question started me thinking about commonalities among companies adopting O-I versus starting that way. And after cogitating more than a bit on this question, including revisiting many years’ worth of clients―some who crossed the threshold, others that got part-way before flinching, I believe I did find the “secret sauce:”

The recipe is: one part steely-eyed recognition that customers now hold the upper hand in buyer-seller relationships; one part shrewd assessment of how to take advantage of this customer empowerment; and one part dispassionate willingness to redesign their organizations from top to bottom―and from the customer in―regardless of where the bodies fall (or fly). And BTW, not one ounce of goody-two-shoes empathy for customers. O-I is a cold, calculated business choice for companies that successfully migrate from inside-out to Outside-In.

Companies that try to go O-I because “it’s the right thing to do” don’t get far. While leaders are empathizing with customers, they’re also empathizing with employees and dithering over decisions about which people and what silos have to be moved around, aside or out to make way for a customer-in designed organization―which needs fewer employees, supervisors, managers and executives than an inside-out company, not to mention greatly shrunk silo walls.  

Other views?

Why Would Wells Fargo Betray Its HSA Customers?

An open letter to the management & board of directors of Wells Fargo

As business professionals, you must recognize that building and maintaining customer trust creates more value for the corporation than any product or service. That’s particularly true today, in markets with more supply than demand. So I have to assume that the pain you’re inflicting on your health savings account (HSA) customers has escaped your notice. Unfortunately, that represents a severe lack of oversight on your parts.

Recently, I blogged about your failure to provide your customers proper access to their HSA account deposits―and customer inability to reach your HSA department through any communication channel. I titled the blog, “How Do 60 Minute Wait Times & 10% Unemployment Relate?” ( to focus on the disconnect between customer service understaffing and the high availability of skilled employees, many desperate for work. While I was using Wells Fargo as a pertinant case example, I intended a broader focus applying to the many other companies are similarly short-changing customers to save money.

However, subsequent communication from other customers plus reflection on past experiences tell me I grossly understated the problem relative to Wells Fargo specifically.

Here’s feedback to the blog I received from other customers:

Wells Fargo turns its HSA customers off

My husband and I got the same shameful treatment as you did. We can’t use our family’s 1 (and only) new HSA card because Wells Fargo WITHOUT MY HUSBAND’S PERMISSION changed his HSA fluid account funds into an “investment only” status. Telephone lines are tied up endlessly. And he cannot even access the account online anymore because Wells Fargo made his old password obsolete when they issued him a new card and account number (WITHOUT HIS PERMISSION).

…I’m of the opinion that my husband I should lodge a complaint with the state of California’s Department of Financial Institutions. Wells Fargo due to its high-handed draconian new policies has in effect confiscated our HSA money preventing us from using it for our family’s pressing medical needs. We cannot even transfer the HSA funds to another banking institution.”

“Should be a class action suit against Wells Fargo

I also (unfortunately) have an HSA with Wells Fargo, and have been trying to contact their customer service for 2 weeks, to no avail. I call the “customer service” line and get put on hold for an hour or longer and never get through. You cannot email them if you have an HSA, they do not provide any email address or email form to HSA customers. What a nightmare! This is the worst most customer unfriendly banking experience of my life. I will never bank with Wells Fargo again.”

With lots of persistence and hours with my office phone on speakerphone so I could hear, “We value your business…” or whatever over and over again―for hours―I was finally able to reach customer service. Only then did I learn HSA recently switched over to an insufficiently tested new computer system that’s altering customers’ accounts on its own and not even able to issue more than one debit card per account.

Wells Fargo joins many other companies in experiencing catastrophic customer service issues following unsuccessful system transitions. But I know of no similar situation (except for fraud cases) involving restricting or blocking customer access to money they’ve deposited with a financial institution. Further, it’s unthinkable for an FI to fail to communicate with customers―either proactively or even reactively―regarding their inability to access their money. Wells Fargo is callously treating customer money as its own, earning money on it, and getting around to “dispensing” money to customers on its own schedule.

Why is Wells Fargo doing this? Don’t you understand that today’s customers are highly transient? Don’t you understand that honestly and openly communicating with customers about problems (see Johnson & Johnson) produces far better outcomes than hiding problems and hiding from customers inside your firewalls?

On your website you offer a quote from your Chairman & CEO, John Stumpf: 

 “Integrity is not a commodity. It’s the most rare and precious of personal attributes. It is the core of a person’s — and a company’s — reputation.”

Clearly, Wells Fargo as an organization does not subscribe to these principles. Your HSA function has fundamentally broken trust with customers, showing a distinct lack of integrity and no sign of responsibility to them. And this is not an isolated incident for Wells Fargo, just the most recent and acute.

A couple of years back I posted a blog on CustomerThink, a global gathering site for business people serious about building and maintaining customer relationships. The title is, “Wells Fargo: Fifty Ways to Leave Your Customer” ( While even my most popular posts rarely exceed 1,000 hits, this one has attracted 18,059 hits to date. Why do you think this happened?

Wake up folks. You have lots and lots of angry customers out there. They deserve better (as do shareholders). And if customers don’t get better, you’ll soon need to close lots more than your retail lending storefronts.


Dick Lee

Principal, High-Yield Methods

How Do 60 Minute Wait Times & 10% Unemployment Relate?

Believe me, I’m not trying to use Wells Fargo as a whipping boy. But when customer service gets this intolerably bad, someone in San Francisco needs to wake up. Or are they dead?

My wife & I had an HSA (Health Savings Account) with Wells Fargo. I won’t bore you with all the customer-unfriendly stuff they pulled, but recently and for unknown reasons they decided to change our account number and issue a new card with a new PIN, despite our old cards being valid until 2011. Only they sent only my card, without one for my wife. Hey, not more than a minor inconvenience no? No. I tried calling them, got into a waiting queue, and waited and waited and waited. For over an hour.

While I was waiting I tried to reach HSA customer service over the web. You can’t. Then I tried to access general customer service but faced drop down fields for questions giving no appropriate answers. Should I call an HSA account an “auto loan?”Guess where that e-mail would wind up. So I tried their general “call a banker” service for telephone banking. Got through in about 10 minutes. The first question the “banker” asked? “What’s an HSA?” She finally agreed to try contacting HSA service using their internal phone numbers, and I made her promise not to transfer me back into the same queue.

I don’t have to tell you what she did. So, right now, I have no means of getting a second card. Their contact center is that understaffed, despite skilled people galore on the streets, many willing to work for whatever paltry wage they offer phone reps. And I’ll bet most already know what an HSA is. As a customer, I am disgusted WF lets customers stew on the phone for over an hour (maybe multiple hours, who knows?) without dipping into the endlessly deep unemployment pools to put more agents on the phone. Just one more example of how they put customers last.

Why are we still with them? Actually, we used to be 100% Wells Fargo – two businesses and all our personal banking. Private banking, even. We shifted our accounts to a smaller, regional bank two years ago, but forgot to transfer our HSA. When we started having trouble – as in having our HSA debit cards rejected when we had more than ample funds in the account (you know, we used the card too many times in one month, or went over our “limit,” which happens to be less than what’s in the account), we were sort of stuck. As impending empty nesters we’re city-bound, but we don’t know where exactly so don’t know where we’ll bank. But this is so over the top that I’m going to get my wife a card by switching our HSA to a different bank, any bank.

A couple years ago, when we pulled all our other business from Wells Fargo, I posted a blog in CustomerThink titled: “Wells Fargo, 50 Ways to Leave Your Customer.” It drew over 16,000 hits – a near record. Guess lots of others have similar stories.

PS: I wrote this while on hold the second time. When I finished, I needed to go out for lunch. So I decided to leave the call on hold while I was out. When I cam beck, guess what greeted me? “Your call is important to us…”

PPS: A half-hour after the initial post someone did pick up the call. They switched to a new data system that can only generate one card per account. Brilliant, eh?

The Lunacy of Cost-Cutting by Cutting Costs

A new McKinsey study reports: “Only 10% of cost-reduction programs sustain their results three years on.” What goes wrong? Two things. Companies either: 1.) ignore process and just cut bodies; or, 2.) redesign “how” work is done for cost-cutting purposes. The first approach should be discussed in a “Dick & Jane” group, not here. The second approach not only ignores the root causes of inefficiency, but it’s like pulling a coiled spring and expecting it to stay extended. Three years to spring back? Lucky if it takes three months. Or three weeks. Or even three days. 

To create lasting change, companies have to remove the spring, not pull on it. By that, I mean they have to change “what” work is being done; “who” functionally is doing it;” yes, “how” it’s done, although that’s not the most important element; and the underlying technology support. Doing all four creates sufficient change to eliminate the “recoil route,” which is essential to avoid reversion. But how does this reduce expense better than making “how” work is done more efficient – in other words, “cutting costs?” 

Simplement, my friends. By letting customers determine: “What” work should be done; “Who” should do it; “How” it should be done; and the technology that should support the new work. Wait, letting customers drive work saves money? You betcha. Customers HATE: layers of bureaucracy; dealing with un-empowered employees; excess supervision; relying on complex policies instead of common sense; work designed to maintain internal silos instead of delivering customer value – all the damn stuff Outside-In process eliminates, thereby cutting far more cost than accomplished by cutting one body at a time or using a process knife to trim surface fat. 


Traditional Process Approaches Continue Failing to Cut O/S (office/service) Costs

To avoid blowback, I won’t mention these traditional approaches by name. But you know which I’m talking about. The square process pegs designed for manufacturing that process people keep trying to bang into round, O/S process holes.

 Want proof they’re not working? From a new McKinsey report: “While manufacturing efficiencies have helped S&P 500 companies reduce the median cost of goods sold (as a percentage of revenue) by 2.7%, over the past decade, SG&A (the old way to say O/S) costs have remained at about the same level.” And this is during the same decade that failed or underperforming traditional process approach redesigns in the O/S have become a pandemic.

No wonder things aren’t improving. And with SG&A costs rapidly narrowing the gap with customarily much higher COGS, not improving is not an option, or won’t be for much longer. The shame is that process approaches designed for the O/S can readily reduce O/S labor, not by 2.7%, but by 27% and more.

The 64-thousand dollar question is, why do process people continue to prove Maslow right – “when the only tool you have is a hammer, then all the world tends to look like a nail” – and why is senior management still not reacting to all the failed, traditional process “fixes” in O/S settings?